By James J. Saccacio, RealtyTrac Chief Executive Officer Even if you’ve conducted thorough research on a foreclosure property and successfully placed the winning bid at the public auction, it doesn’t necessarily mean you can move into the property or start making needed repairs right away. In fact, there’s a chance the former owners of your newly purchased property may still be living there, making it a bit difficult to physically take possession. If you’re not prepared for that possibility, you could be in for an arduous and messy eviction process that makes you question why you bought the property in the first place.
Properties arrive at public foreclosure auction at the end of a pre-foreclosure period that occurs after property owners default on their monthly mortgage payments.
A chaotic eviction process can often be avoided with some careful research and planning. Though regulations and procedures differ from state to state, the following guidelines can help you learn how the eviction process works and how to avoid a long and drawn-out eviction process so that you can take possession quickly when you buy a foreclosure property at public auction.
First things first – establishing ownership
At the time of the auction, make sure you are given all the necessary documents from the auctioneer showing that you are the new owner of the property. At that time, you should speak with the auctioneer and a real estate attorney regarding any additional steps that must be taken before you can officially take possession of the property. In some states the sale will need to be confirmed by the court either immediately or within a period of up to a few months.
In states that honor a redemption period for owners, the previous owner of the property has an opportunity to buy the property back from you by providing the full amount paid at the auction in addition to any applicable fees. This redemption period can range from a month to a year, depending on individual state laws. You’ll want to know whether right of redemption applies in your state and the length of time that is allowed, as this may be a reason for the previous owner’s refusal to vacate the property.
Understanding the eviction process
Keeping in mind that state eviction laws vary, it is imperative that you contact a local real estate attorney or the county sheriff's office to determine the proper procedure to follow in your area. That’s the only way you can be sure the eviction is handled legally, protecting the rights of everyone involved.
That doesn’t mean you’ll always have to go through the entire eviction process. If the property is already vacant or the former owners voluntarily move out, no eviction is needed. Some investors only bid on vacant properties to avoid any chance of having to confront a former homeowner. On the other hand, many homeowners will move out voluntarily if you contact them and gently let them know that you purchased the property, providing the documents from the auction as evidence. Still, it’s best to check with a real estate attorney or the county sheriff to make sure that you do everything by the book.
If the property isn’t already vacant or the former homeowners don’t voluntarily move out, you’ll need to initiate eviction through the court system, which can take months compared to days. That’s why it’s best to try to avoid this process by only purchasing vacant properties or by contacting the owner first.
Once the court rules a final judgment in your favor, you can obtain a writ of possession and have the local sheriff evict the occupant. Eviction typically occurs 24 hours after the sheriff serves an eviction notice to the occupant, at which time the sheriff can have the occupant’s possessions physically removed from the property.
What about tenants if the property was a rental?
Rental properties that have been purchased at foreclosure auction create a sticky situation for new buyers as well as for tenants who very well may have been paying their rent on time to a landlord whose property ultimately fell into foreclosure. While the sale of non-foreclosure rental property requires the new owner to honor the leases of existing tenants, foreclosure sales typically allow the new owner to dissolve any existing leases. The new owner can usually evict the existing tenants once ownership has been established.
Keep in mind, however, that if you choose to collect rent at any time without a new lease in place, you essentially assume the role of the tenant’s new landlord under the terms of the existing lease until that lease expires. The obvious exception to this rule is if the tenant somehow violates the conditions of the existing lease, in which case you may have grounds to evict them immediately.
While the process of eviction can be complicated and even emotional, it can be a necessary part of buying a foreclosure property at public auction. By accepting this, understanding the process clearly and working with professionals who know the system, you can assure that everyone’s rights are protected — especially your own.
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